The benchmark price of crude palm oil was raised to $802 a
metric ton from $447, while that of crude soybean oil was
increased to $1,190 from $580, the Central Board of Excise and
Customs said on its website. The rates, on which a 2.5 percent
tax is applicable, will now be revised every fortnight, the
Agriculture Ministry said on Jan. 17. The customs also notified
today the increase in import duty to 2.5 percent from zero.

Higher taxes may lower Indian imports of crude palm oil and
boost inventories in Indonesia and Malaysia, the world’s biggest
producers, and pressure prices in Kuala Lumpur. Reserves in
Malaysia jumped to an all-time high of 2.63 million tons in
December, according to the nation’s palm oil board. Malaysia
will maintain a zero tariff on crude palm oil shipments,
implemented from the start of this month, into February to draw
down the stockpiles.

India may import more of refined cooking oils after the tax
increase, B.V. Mehta, executive director of the Solvent
Extractors’ Association of India, said by phone. “The
government should keep enough gap between the crude and refined
oils duty so that the local industry has a margin to refine.”

India left the import duty on refined cooking oils
unchanged at 7.5 percent last week.

Palm oil represents almost 80 percent of India’s cooking
oil imports. Purchases were a record 10.2 million tons in
2011-2012, according to the the Solvent Extractors’ Association
of India. The country buys palm from Indonesia and Malaysia and
soybean oil from Brazil and Argentina. The government scrapped
the tax on crude palm oil in April 2008 to rein in inflation.